Please ensure Javascript is enabled for purposes of website accessibility

Why FireEye Inc. Stock Slumped Today

By Timothy Green - May 6, 2016 at 1:49PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

FireEye's growth is slowing down, and the departure of the CEO isn't giving investors much confidence in the company.

Image source: FireEye.

What: Shares of cybersecurity company FireEye (MNDT 0.41%) slumped on Friday following the company's first-quarter earnings report. Mixed results, weak guidance, and the departure of the company's CEO pushed the stock down about 18.5% by 11:45 a.m. ET.

So what: FireEye reported quarterly revenue of $168 million, up 34% year over year but about $3.8 million shy of the average analyst estimate. Product revenue declined 16% year over year to $33.7 million, while subscription and services revenue jumped 57.7%. Billings of $186 million grew by 23%, above the company's guidance.

FireEye reported a non-GAAP loss of $0.47 per share, compared to a loss of $0.48 per share during the prior-year period. This was slightly better than analyst expectations, which called for a loss of $0.50 per share. FireEye was even more unprofitable on a GAAP basis, with a net loss of $155.9 million, or $0.98 per share.

The company expects second-quarter revenue between $178 million and $185 million, below analyst expectations of $192.8 million. Full-year revenue is expected between $780 million and $810 million, also below analyst expectations of $828.6 million. Non-GAAP EPS is expected to be a loss of $0.38-$0.40 per share during the second quarter and a loss of $1.20-$1.27 per share during the full year. This compares to analyst estimates calling for a loss of $0.36 per share next quarter and a loss of $1.25 per share in 2016.

Now what: FireEye CEO Dave DeWalt is stepping down, transitioning to the role of executive chairman of the board effective June 15. The current president, Kevin Mandia, will take the helm as the new CEO.

An executive shuffle, mixed earnings, and lackluster guidance were more than enough to send shares of FireEye tumbling on Friday. The stock is now down about 86% from its peak in 2014.

FEYE Chart

FEYE data by YCharts.

FireEye's revenue guidance represents growth of 27.6% at the midpoint, a substantial slowdown compared to recent years. While growth becomes more difficult the larger the company becomes, investors appear unwilling to assign FireEye its former nosebleed valuation while the company continues to post massive losses. With FireEye guiding for slower growth than expected, investors are punishing the stock.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Mandiant, Inc. Stock Quote
Mandiant, Inc.
$21.82 (0.41%) $0.09

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 07/01/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.